The first children who had Child Trust Funds (CTFs) opened for them in September 2002 are now turning 16, enabling them to take control of their funds from their parents or guardians, presenting a challenge for Child Trust Fund servicing.
This “coming of age” is likely to generate a significant, and perhaps unexpected, administrative burden on CTF providers. Add to that the option for these (and other) customers to switch their CTFs to Junior ISAs, and a Child Trust Fund servicing time-bomb is soon to start ticking.
CTFs have been operating somewhat under the radar since their inception in 2002, due to their relatively low monetary value, which means the sudden influx of enquiries and requests for change could come as a surprise for providers. Couple that with the challenges that service provision for Generation Z creates, and providers may get overwhelmed.
Providing Financial Services for Gen Z
While Millennials are noticeably present in the lending and investments markets, providers are only just catching up with their evolving demands. These customers are no longer satisfied with traditional service provision, instead opting for a combination of face to face, digital and telephony services. And just as providers get used to this shift in operational demands, along comes Generation Z to disrupt the market even further. The advent of the Child Trust Fund in 2002 has brought this generation into their financial life cycle earlier than previous generations, and their savvy and untrusting nature is about to explode onto the scene.
Gen Z has been brought up in an instant communication world, with many 16 year olds having never sent an email, preferring to IM or Chat instead, which is why universities don’t provide students with email accounts any more. They expect access to their financial accounts and personal data at any time, and from anywhere. They expect information at their fingertips, and are sceptical of financial services, having witnessed recession and miss-selling within the industry.
As this generation matures and begins to take on more and more financial products, their complex needs will have to be taken into account, and services adapted to satisfy their demands. Only the most agile and responsive providers will succeed in this market.
Child Trust Funds: the start of the journey
After all, providing customer delight in the early stages of their financial journey, goes a long way in securing them as a customer for life. In fact, people in the UK are more likely to get divorced than split with their bank (Financial Times, July 27 2018). For many, their Child Trust Fund is the crucial beginning of their journey with their chosen provider.
Discover the challenges and benefits of effective Child Trust Fund servicing